Midem 2015 Day 3 Wrap: Sony’s Doug Morris and freemium vs. premium

The music industry was out in force this morning to witness Sony CEO and veteran music exec Doug Morris (above right, with University of Oxford’s Rupert Younger) give a highly entertaining keynote interview to a packed room, with the likes of LA Reid and Ultra Music boss Patrick Moxey sitting in the front row.

Midem’s third day began with Morris — who has also worked at Universal and Warner in a career spanning five decades, as well as founding Vevo — recalling his early experience of the music business in the 1950s, from songwriting, to setting up his first label, and meeting Steve Jobs to hear his vision for iTunes.

Discussing how he first got into the industry, Morris said: “I think the music business chose me. I remember loving the music that was sweeping across the US by Chuck Berry, Fats Domino, Little Richard and Jerry Lee Lewis, it was a sexy kind of music and very different to what had preceded it.”

His most important contribution has been “taking on the internet service providers” he said. Morris was the first exec to monetise online music videos, which he did by asking Yahoo for payment in return for using videos by Universal artists on its platform. After getting a firm “over my dead body” from the Yahoo boss at the time, Morris pulled the videos offline and three days later, got a call from Yahoo offering payment.

“In that one month, we turned videos, which were huge, they cost tens of millions of dollars in expenditure to promote the artist, into a tremendous profit centre which is increasing every day. You can’t be afraid of things, you have to go and face them, and I didn’t get one artist complaint, it was a wonderful victory for the industry.”

Looking to the future, Morris said ad-supported tiers on streaming services like Spotify won’t sustain the business. But Apple’s entry could play a big part in returning the industry back to the $30 billion position it was in ten years ago (it’s currently worth $15bn). “Paid streaming tiers are good. Ad-supported, unless there a conversion factor, are not so good. For a company like Spotify, 100 streams equals $1, ad-supported streaming is 900 streams to $1. You can tell which one we like.”

Apple’s “great advantage of having $178bn in the bank” plus the details of 800 million of its users credit cards will result in a “rising tide that lifts all ships”, said Morris. “Spotify has never really advertised because it’s still not profitable. I think that Apple will advertise and the result of this will have halo effect on the entire streaming service [market]: All the companies will benefit.” And what about the streaming service Apple is due to launch? “It’s happening tomorrow,” Morris let slip. You heard it first at Midem!

Moving on to the issues caused to music economies, notably by the gentrification of cities like New York, Berlin and London, came a panel made up of festival, publishing and music export execs, who discussed the concept of ‘music cities‘; the theme of an IFPI/Music Canada report revealed here at Midem.

The Great Escape co-founder, Martin Elbourne, has spent time in Adelaide in Australia working as a consultant to try and improve the city’s music scene. “There seems to be a growing consensus with regions around the world realising that music is a very important part of their cities’ fabric, not just culturally, but economically. It’s one of the cheapest ways to keep your city vibrant,” he said.

Initiatives to preserve venues, like asking developers to sound-proof flats that might be built next to clubs with a long history, bringing festivals to previously badly developed areas, as well as working more closely with tourism offices are some of the measures being taken to progress the future of music making.

Also keen to ensure the future sounds good was Giles Martin – son of Beatles manager George Martin, and Sound Experience Leader at Sonos. Growing up around what were the biggest band in the world during the beginnings of the music industry gave Martin a degree-level education in sound quality, formats and the recording studio. However, rather than hark back to memories of yore, he said “the good old days weren’t really all that good” and we should “celebrate the fact that we have every single brilliant and vibrant work at our fingertips.

“The future will belong to those in the industry who can prove themselves to create the most seamless link between artists and fans. We need to make sure music is felt, absorbed and celebrated, that it’s listened to and not just heard,” he added.

Next up was YouTube’s Global Head of Partnerships Christophe Muller who, rather than face potentially difficult questions about YouTube royalty payouts, interviewed Believe Digital CEO Denis Ladegaillerie (left). After sharing some key stats about the video streaming platform — including the fact that 50% of its users are now accessing via mobile (90% growth YoY) — Muller sat down with Ladegaillerie, who discussed what he sees as a “confusion over streaming payouts“.

In the days of the CD, record labels would sell CDs to retail chains and get around 65-70% of revenues back. It was the same figure for iTunes downloads, Ladegaillerie explained. And in the streaming era, digital platforms are still paying out 65-70% of their revenues to the industry. So why all the complaints?

“We are maybe slightly above the middle of the digital transition, I think it’s going to create much more opportunity in the coming 10 years,” he said. “We are starting to get to a point of marketing and promotion. [We need to learn how to use] YouTube for artists, how to get leverage, use data to market music, how to better promote, how we use technology in the creative cycle. The next 10 years from that standpoint are going to be much more enjoyable.”

Sitting on the other side of the fence, and fighting for change on behalf of songwriters and creators was ASCAP CEO and composer and songwriter Paul Williams, who said it’s not the kids that need to be educated about the value of music, it’s the digital distributors.

“Companies behind the delivery platforms and devices know that demand for music will continue to grow globally. It’s time for them to recognise that respecting the work of songwriters/composers is essential to their future,” he said.

The music industry – publishers, labels and artists – need to “work together and stop shoving each other to get a slice of the pie“. And that’s happening, concluded Williams. “Songwriters are not an endangered species, at 74-years-old this guy is still excited abut doing the work.”

Kenny Gates from PIAS, Martin Goldschmidt of Cooking Vinyl and Mute founder Daniel Miller then discussed what being successful as an independent label meant in 2015. Making money for both the artist and the label was the answer from Goldschmidt, as well as trying to exceed their expectations. Keeping promises, creating careers and trying to earn revenue from that was Gates’ response, while Glass cited commitment and flexibility.

Rounding off the day in style was the ‘Godfather of Techno’ and founder of record label, Metroplex, Juan Atkins (with moderator Bill Werde, right). After an interview discussing his early career finding his innovative musical style and influences, Atkins parted with some words of advice for those stuck in the past.

“Kids aren’t going out buying drums and guitars any more, they are buying Ableton 9 and Native Instruments. What the industry and people should realise is the internet is making artists and young kids more creative than ever. People should open their mind a bit more and not let the industry force-feed what they think.”

Watch Midem day 3’s sessions – plus all of this year’s top conferences – in full here:

Midem 2016 full conference videos

A Midem Day in the Life

Midem on Twitter

Midem on Facebook

INDUSTRY NEWS

About us

This is the official blog of Midem, the destination for music business connections and knowledge, and its conferences (next edition: June 3-6, 2016, Cannes, France).
midemblog is edited by Reed MIDEM's social media team, with regular guest contributions from industry experts.